Daily update
Daily update
- Japan published some labor market data, with April cash earnings. On a like-for-like comparison, these were somewhat weaker than expected (and they remain negative in real terms). There are two points worth bearing in mind. An increasing share of Japanese consumers do not depend on earnings to finance consumption, because of population aging. And more of the Japanese economy has been supported by foreign consumers as tourists.
- Eurozone April producer price inflation is (as ever) pre-empted by regional figures. However, more sensationally inclined observers have been getting animated about a modest rise in consumer price inflation, and will doubtless seize on these figures. Deflation is likely to remain—and these prices better reflect the state of corporate pricing power.
- Indian financial markets reacted yesterday as it became evident that Prime Minister Modi will not have an outright majority in parliament after the recent elections (and will rely on allies to govern). This is a reminder that markets struggle to price the nuance of political risk, and that the apparent conviction of opinion polls is to be treated with caution.
- On the subject of poll-based evidence, the data calendar is littered with business sentiment surveys today. Sentiment has not been great at recording reality in recent years.
